Risk Management for SMEs David Martin Mark Van der Haar Directors - - PDF document

6/03/2020 1

Risk Management for SME’s David Martin Mark Van der Haar Directors – AB Phillips

Risk Management for SME’s

David Martin Mark Van der Haar Directors – AB Phillips

1 2

6/03/2020 2

Agenda

• Change
• Risk Management
• Insurance – One part of the puzzle
• History & How it works
• Trends
• Key Insurances

Change

Globalisation Geographic Social Technology Environmental Population

3 4

6/03/2020 3

Risk Management

• What is Risk?

Anything that may have the potential to harm the health or safety

• f a person, the business assets or its ability to continue.
• Who is responsible for Risk Management?

The employer or organisation is responsible to provide a safe working environment and take reasonable care to identify hazards to both people and the business, and introduce effective measures to mitigate or control the risk.

Risk Management

Systemic Approach Designed to be;

• Living process
• Minimise losses
• Maximise opportunities

RISK

Management

Monitor Review Identify Action Analyse

5 6

6/03/2020 4

Eliminating or Controlling Risk

Build Strategies

• Tfer to other parties by;
• Contract
• Insurance
• Implement Procedures ie:
• Administrative
• Engineering
• Maintenance
• Security

Action

How does this affect insurance?

Transfer of risk to Insurance is extremely common strategy for mitigation or elimination of risk Underwriters are taking a lead and an attentive role in Risk Management

• Well managed organisations do not have the same

exposures

• Orgs with strong risk management plans have;
• less claims
• less expensive claims
• More likelihood of recovery after an event
• More likelihood of growth and success

7 8

6/03/2020 5

History Insurance

1686 - Edward Lloyds Coffee shop

LLoyds

Syndicates Corporate Financiers Wholesale Brokers Brokers Re- insurers “Names”

LLoyds

Merchants Sailors Ship Owners Investors

Corporate body governed by the Lloyd's Act 1871

Insurance & Re-insurance Market £53.5 billion of syndicate-level assets

Global Insurance Market

Growth – Developing World Centric Markets are becoming much more contested

9 10

6/03/2020 6

Insurance Trends

• Working with Businesses to reduce claims and improve

profitability

• Growth into emerging markets
• Developing new products
• Integrating existing external providers to minimise costs
• Short term premium increases due to supply demand

Insurance - Types

11 12

6/03/2020 7

General Business Insurances

Business Pack

Public liability Fire & peril Theft Business interruption Electronic equipment breakdown General property damage

Under Valuation

• Co Insurance Clause

Professional Indemnity (PI)

the conduct of the insured’s professional service causing a client to suffer a ‘real’ financial loss – Errors & Omissions (E&O)

Claims arising from

• All related entities
• Directors, execs and employees

(past, present & future)

• Claims made (as opposed to
• ccurrence based)

Coverage

13 14

6/03/2020 8

Management Liability (ML)

Designed as protection for SME businesses and their directors.

• Directors & Officers
• Employment Practices
• Statutory Liability
• Crime / Fraud
• Kidnap, Ransom & Extortion
• Cyber*

EPL claims can be heavily reduced through utilisation of PMA solutions

Cyber Crime

15 16

6/03/2020 9

Cyber Crime Insurance

Feature Benefit Business Interruption Coverage for a drop in revenue 3rd Party Liability & Multimedia injury Judgements, settlements, civil penalties etc as a direct result of a multimedia injury to a third party Response Costs

• Restoring data
• mitigating further damage
• Notification costs
• Credit and Identity monitoring
• Legal and forensic costs
• IT consultant Costs
• Extortion costs

Business Interruption

• External Supplier suffers cyber event

Cyber Theft

• Stolen funds

Insurance free solution

Outdated software exposes businesses to potential attacks, triggers loss of clients’ personal information, leading to brand damage and rectification costs.

Ensure software licences up to date and AV updates enabled

Review and ensure sensitive information, such as payment data or confidential trade secrets, is secure.

Regularly review information stored internally

SMEs need to know how to sustain operations even if data access is disrupted and act quickly to prevent distressed customers or lost revenue after an attack.

Advise SMEs to plan ahead.

The most successful companies at preventing cyber losses lead from the top and educate their employees.

Do they involve all the workforce? 17 18

6/03/2020 10

Business Interruption

“Business interruption insurance deals with the continuity of income after property is damaged

• r lost after a catastrophic event”

Covers;

• Loss of Income*
• Additional cost of working

*total lost Income = lost revenue + costs incurred in reducing your loss - expenses normally incurred

Worker’s Compensation

• Administered at a State Level
• Responsible for:
• Education
• Licensing and Registration
• Insurance
• Work Place inspections
• Prosecutions
• Claims & Return to work
• Claim costs impact your Premium

for 3 years

19 20

6/03/2020 11

Work-Related Mental Health

Employers are now, under OH&S, responsible to ensure employees are not facing adverse conditions which have a negative impact on their mental health – Work Related stress. Key Statistics:

• 7,200 plaintiffs compensated (6% of all WC claims)
• Time off work was 15.3 weeks compared to 5.5 weeks average
• compensation was $24,500 compared to $9,000 for all claims

Sources of WR Stress Claims

Sources of Claims At Risk Occupations

• Train and tram drivers (10.3 claims per

million hours)

• police (6.6 claims per million hours)
• Indigenous health workers (6.0 claims

per million hours)

• prison officers (4.0 claims per million

hours)

• ambulance officers and paramedics

(4.0 claims per million hours)

21 22

6/03/2020 12

What’s on your mind

Consider where you or your clients are most exposed / least prepared

23 24